[Dovecot] dovecot non-local users

[Tom Allison]

 From the docs:

System without local users
--------------------------

<snip>

Having one uid per user would mean that in case of a security hole in
Dovecot, the user still couldn't read other peoples mails. Use this if
possible.

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I don't quite understand this one.
If you aren't a local user, what's the uid all about?

Do I do something like:
create a user for mydomain in /etc/passwd (eg: user:domain_dude, 
home:/var/dovecot) with a valid home/uid/gid.
Plug in the uid/gid/home for domain_dude in the authentication and have 
a data structure of /var/dovecot/%d/%n/Maildir
or %h/%d/%d/Maildir where %h = "/var/dovecot" via /etc/passwd.

Something like that?